What purpose does the balance sheet serve?
A) It shows the stock price of the firm during the last year and how much fluctuation there have been in the stock price.
B) It shows short- and long-term liquidity ratios, profitability ratios, and activity ratios.
C) It shows a firm's financial condition on a particular date in terms of its assets, liabilities, and owners' equity.
D) It shows investors how much profit the firm made during the last year.
E) It shows a firm's sources and uses of cash.

Question

Quizplus · Accepted Answer

The balance sheet serves the purpose of showing a firm's financial condition on a specific date by providing information on the firm's assets, liabilities, and owners' equity. It does not provide information on stock prices, profitability ratios, activity ratios or sources and uses of cash.

What Purpose Does the Balance Sheet Serve